Orion Partners, a real estate and private equity investment firm based in Hong Kong, is considering launching a global agriculture fund later this year.
The firm is now researching agriculture investment opportunities and strategic partnerships across both real estate and private equity, according to TK Chiang, managing partner at Orion Partners.
“We are very much a sector-specific group and like to choose niches that we can capitalise on,” he told Agri Investor. “As a macro play it made sense to us. You don’t need to be a rocket scientist to realise that food security and food safety issues will make agriculture a valuable investment.”
The firm hopes to co-invest with other GPs globally that have agriculture expertise. It is also likely to attract investors with a strategic reason to be investing in the sector, said Chiang.
While Orion has focused on investing in China, Japan and South Korea in the past, the agriculture fund will have a global remit after Chiang and his colleagues noticed demand from institutional investors outside of the region. There is also a natural link between North Asia and the global agriculture market, said Chiang.
“North Asia actually plays a fundamental role in global demand for agriculture so a global focus will still have a strong Asia angle,” he said.
Orion will focus on investing in agriculture supply chain processes and businesses that offer a blended return — yield plus total return — such as in distribution, cold storage and packaging. And businesses where it can add value, said Chiang. The firm will also research real estate investment into farmland, buying the farmland or renting it and then leasing it back to farmers, but this will account for a minority stake in any fund, he added.
“We like the balance of the two asset classes,” said Chiang. “Farmland can be a good yield play, but total return depends where in the real estate cycle you are and can be more volatile. The private equity supply chain play is less influenced by issues such as the climate so demand is often more predictable.”